3 Reasons Business Owners Should Consider Rolling Over Their 401k to an IRA

So you took the leap and started a business. Whether that was recently or years ago, to you I say congrats! What an accomplishment to leave your old employer to begin a passion-driven career that you design. With all the excitement your new business brings, it can be easy to forget about that old 401k you had with your previous employer. Here are three reasons why you should consider rolling over your 401k to an IRA:

1. More Investment Options

   Typically, 401ks have a set list of investment options you can choose from. This limits you to what’s on the paper in front of you. Yes, there is a chance you could have a great list of investment options, but there is a chance it could be the other way around too.

   IRAs open up many other investment opportunities. Instead of potentially only having a few mutual fund options, you can choose from a variety of different mutual funds, ETFs, individual stock, bonds, and more. IRAs have more choices to fit a whole range of different needs. Who doesn’t love more customization?

2. Lower Fees

   With more choices, may come lower fees. Management fees, administrative fees, and fund expense ratios can have a big impact on your retirement savings. This will look different for every 401k plan, but it is worth looking into. 

   If your plan has costly mutual fund options, IRAs could open a door to potential savings by choosing lower-cost investments. By rolling your old employer plan over to an IRA, you could be getting more money back in your pocket come retirement. 

3. Better Communication

   Your old 401k may be sitting at an investment firm that may have long hold times, poor communication, and more pains in your side. It may be harder to get information on your plan than if you were a current employee.

   With an IRA and working with a Fiduciary Financial Advisor, you can have direct access to me and the company your IRA is held at. Instead of being an old employee, you are my client - a relationship I take seriously. No long hold times or lack of communication. Instead, one-on-one communication, questions answered, and your best interests first. 

Don’t let your old 401k be a nagging concern as you continue to drive a pathway in your business. Let’s look at your old 401k together and figure out the best option for you. More investment options, lower fees, and better communication may be in your future. Sounds like a pretty good future to me. 

Here, at Fiduciary Financial Advisors, we take our fiduciary oath seriously. We hold these five principles:

1. I will always put your best interests first

2. I will avoid conflicts of interest

3. I will act with prudence; that is, with the skill, care, diligence, and good judgment of a professional

4. I will not mislead you, and I will provide conspicuous, full, and fair disclosure of all important facts.

5. I will fully disclose, and fairly manage, in your favor, any unavoidable conflicts

Action Point Financial Planning, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

How to Actually Keep Your New Year’s Resolutions

New Year’s Eve has passed, the ball has dropped, our resolutions are made, 2021 has begun. I love the New Year. There’s something about getting motivated to be better and to do better.

You know what I don’t love? February, March, maybe even mid-January when our motivation toward our new goals runs and hides. We’ve all been there - killing it the first few weeks then falling back into comfortability.

I’m here to shed some light on how we can keep our New Year’s resolutions. I believe this is just as important as making your resolutions in the first place. Here are five simple steps to kill it the whole year:

You’ve Got a Friend in Me

Support, support, support. I know this one is cliche and you’ve probably heard it a million times, but there may just be a reason that’s the case.

Trying to make some major dents in your debt, increase your retirement savings, actually use your gym membership? Team up with your spouse, a close loved one, a friend, literally anyone who will encourage you and check-in with you.

Whoever it is you choose, discuss how often they will check-in and return the favor. Teamwork makes the dreamwork, ya know.

All About the Progress Tracking

Want to run a faster mile? The first thing to do: actually time yourself at the start of your training. Trust me, I know this seems obvious. But, I’m sure we can all think back on a year (or years) where we never bothered to track our progress.

Let’s make this a priority this year. Grab a notebook, open up notes on your phone, and record. What’s your current debt balance? What’s your retirement contribution right now? How many times do you go to the gym each week? You get the point.

Listen! Don’t stop there. Weekly, monthly, quarterly, whatever it is record those same numbers. Nothing better than seeing your positive progress. Not so great progress can be just as powerful to motivate you.

Put It on The Calendar

We all know how time can magically slip away from us. Reoccurring self-evaluation and progress tracking is typically not something we put first on our list of to-dos.

Physically block out a time on your calendar (and add a notification) to sit down and check how you are doing with your resolutions. Take control of your time and your resolutions.

Patience is a Virtue

Think about it; typically, our resolutions are about reversing some bad habit we’ve had for years. If we’ve done (or not done) the same thing for months and months, we can’t expect to complete one-eighty with the snap of a finger. New habits take time. Patience needs to be our friend.

Consistency is key and it should be paired with patience. Start simple. Don’t try to change your life in one day. Accept good things take time and use that as your primary motivation to keep on keeping on. Patience can be a comforting companion.

2021 is a fresh page. I think we all appreciate the New Year just a little more this time around. Whether you have some major financial goals you want to tackle this year or you are just sick of falling into the same “resolution rut” each year, take these ideas with you: find support, track your progress, block out your calendar, and remember - patience is your friend.

I have the privilege to help people like you work toward their goals every day. It’s always New Year’s with me. Have questions about what financial strides to take? What investment accounts to utilize? Looking for opportunities to minimize your portfolio fees? I got you covered. I can be your support, help you track your progress, and remind you self-evaluation and patience are vital. Let’s start this New Year off right - together.

Here, at Fiduciary Financial Advisors, we take our fiduciary oath seriously. We hold these five principles:

1. I will always put your best interests first

2. I will avoid conflicts of interest

3. I will act with prudence; that is, with the skill, care, diligence, and good judgment of a professional

4. I will not mislead you, and I will provide conspicuous, full, and fair disclosure of all important facts.

5. I will fully disclose, and fairly manage, in your favor, any unavoidable conflicts

Why I’m quitting a good job, in the middle of a pandemic, with my first kid on the way, to pursue my passion for financial advising

As I began to share with family, friends, and coworkers that I was changing careers to become a financial advisor a common question they asked was, “why?” or “why now?”. I think I knew on some level the answers to these questions but having to actually explain “why” out loud clarified for me what motivated this change and made me more and more confident I was on the right path.

1. I want to be able to see the impact my work has. I truly believe Steelcase and my work there has helped contribute to more inspiring work environments, but it can be hard for that to feel immediate or personal. For me, seeing the direct impact of helping people attain their goals and plan their financial futures will be more fulfilling.

2. Doing something I’m truly passionate about will bring out the best in me. I’m conscientious and hard-working regardless of what I’m doing, but I also know I’m at my best when doing something I really care about and enjoy.

3. I realized I had no control in the corporate world. A lot of people and companies had to do whatever it took to get by in 2020. I think Steelcase handled things as well as they could! But project cuts, people cuts, and being told how many hours you’ll work and where puts your lack of control in the corporate world into clear focus.

4. Change will only get harder. I certainly won’t have more time or energy once kids are part of the equation! That plus inertia makes me believe a leap like this will only get harder the longer I wait.

5. I never wanted to wonder “what if?” 

If I’m honest with myself, there are a lot of “I’s” and “wants” there. In many ways “pursuing a passion” does feel selfish and privileged, especially this year. Because of that I’m even more grateful for a supportive wife who encouraged me to get serious about pursuing this new career when she could have told me to be practical and keep a reliable job with a salary. I’m also thankful for family, friends, and coworkers who have offered encouraging words when they could have discouraged me or rolled their eyes. Thanks for being part of my team!

Lastly, thank-you to Fiduciary Financial Advisors for taking me on… I’m so excited to be joining an independent local firm that is doing things the right way! I never would have made this leap if it wasn’t to join something I really believe in.

Have you made or thought about a big change during 2020? Would be nice to know I’m not the only one!

Home for the Holidays Magazine→

HZ PHOTOS

How to Hire a Financial Advisor

Ready or not, the holidays are headed our way. Soon, we will be carving the turkey, scrambling to get our last-minute gifts, hearing jingle bells in our sleep, and pulling out our ugly sweaters for their once a year use. Although family gatherings may look completely different this year, safely in-person or virtual family conversations will still be in our midst. 

Remember that unspoken rule that you shouldn’t talk about money or politics at family gatherings? You know - the rule that somehow always gets broken at holiday parties? Well, I’m here to help you be prepared with what to say. Let me back up: I’m here to help you with the money convos - not the political side. You’re on your own for that one. 

Financial Advisors are one of the many money topics that get brought up. Whether you are currently working with an Advisor or are on the hunt for one, knowing how to hire a Financial Advisor is a skill worth knowing. I’m not encouraging you to break the unspoken rule, however, I am encouraging you to continue reading to impress your Uncle with this valuable piece of wisdom. 

Fiduciary All the Way

Did you know that there are Financial Advisors who have no legal obligation to put your best interests first? Not only that but they can recommend investment products to you that actually pay them more. This sounds crazy - I know. The craziest part? Over 90% of so-called “Financial Advisors” are NOT fiduciaries. You don’t want to ever question if your Financial Advisor advised something because it was best for you or for them.

Financial Advisors who are true fiduciaries are held to a legal standard where they must put your best interests first. They cannot earn commission off a product they recommend. They will disclose any conflicts of interest. 

Know How They Get Paid & How Much You Pay

Financial Advisors can get paid in many different ways. Commission-only, fee-only, fee-based are all examples of how they receive a paycheck. Make sure you fully understand how they get paid and what they will charge you. If they aren’t giving you a straight answer on their fees, this should be a red flag. 

Want a hint? Fiduciary Financial Advisors are classified as fee-only. They could charge you on a flat fee, an hourly rate, retainer method, a percentage of assets under management, or a combination. 

Don’t forget about your investment portfolio’s expense ratio. The expense ratio is charged by the investment company to the investor. This fee reflects the cost of the investment company’s management and operating expenses. Even though this percentage does not go to your Advisor, it’s important that they are transparent about your all-in costs. 

Transparency is key here. Don’t leave the Advisor’s office without a complete understanding of how they get paid and how much you will pay. 

Understanding Your Relationship

Communication and access to your Advisor are important. You should have a clear idea of how your relationship will work. Will you meet once a year? Twice a year? More? How can you get a hold of them? Everyone has a different idea of how often they want to talk to their Advisor. 

Be on the same page with the expectations of your relationship and also the Advisor’s capability to meet those expectations. 

Good Educators Matter

When you are interviewing your Advisor - remember, you are hiring them - ask questions and listen to how they respond. Do they take the time to explain and teach? Are they patient with you? Most people like to have a basic understanding of why their money is doing what it is doing. Advisors need to be good educators and focus on making sure you understand. Who wants to leave their meeting confused and unsure?

Gotta Click With Them

No one wants to be bouncing around Financial Advisors throughout their lifetime. In a perfect world, you and your Advisor could have a relationship that lasts your entire life. If we go into it with that mindset, you need to click with them. Relationships matter! Feel out how you jive with them and make sure it is a good match. 

Do you love the company but just aren’t clicking with one Advisor? Be honest with the Advisor and ask if they recommend another Advisor from their company. This is your financial life and working with someone you enjoy should be a priority. 

What’s Their Investment Philosophy?

What are the beliefs and principles that they will make investment decisions based on? Do they align with your goals? An Advisor should be able to clearly explain this to you. Another great question to ask them is, do you or would you personally invest in this fund? That answer can lead you in the right direction. 

With this guide, you can now go confidently to your holiday parties. You may even want to break the unspoken rule. I don’t blame you - people need to know this. Do you or a family member already work with an Advisor? Challenge them to answer any area of this guide you may not know. 

Hire a Financial Advisor who is a fiduciary, transparent of their fees and your all-in costs, clear about your relationship, a good educator, someone you click with, and has a defined investment philosophy.

The holiday season always flies by. Soon the ringing of the jingle bells will be replaced with the ringing in of 2021. Start your new year off knowing how to hire the right Financial Advisor and doing so confidently. 

Here, at Fiduciary Financial Advisors, we take our fiduciary oath seriously. We hold these five principles:

1. I will always put your best interests first

2. I will avoid conflicts of interest

3. I will act with prudence; that is, with the skill, care, diligence, and good judgment of a professional

4. I will not mislead you, and I will provide conspicuous, full, and fair disclosure of all important facts.

5. I will fully disclose, and fairly manage, in your favor, any unavoidable conflicts

The information contained herein has been obtained from a third party source which is believed to be reliable but is subject to correction for error. Action Point Financial Planning LLC does not give legal or tax advice. The information contained does not constitute a solicitation or offer to buy or sell any security and does not purport to be a complete statement of all material facts relating to the strategies and services mentioned. Past performance is not a guarantee or representation of future results.

What Investors Can Learn From the Coronavirus

2020 has not been the most welcoming year. Our world has been shaken by the coronavirus and many have experienced the financial tensions it has brought along. Even though we can’t say the coronavirus is completely behind us yet, investors can rule out some important lessons the rocky season has taught us. 

Your Risk Tolerance Matters

Each of us are unique individuals. Each of us think differently and react differently to situations. Therefore, each of us have a unique tolerance toward risk. In other words, the amount of risk we are willing to take within our portfolio looks different for all of us. Aligning your portfolio with your risk tolerance can save you a lot of sleepless nights. 

Recently, the market fell tremendously due to the coronavirus pandemic. Investment account balances dropped, fear roared, financial advisors were googled, and stress was thriving. If your investment portfolio took on too much risk, you may have experienced one of those things. Just because your portfolio and risk tolerance are aligned, doesn’t mean your investment account balance won’t go down or your emotions will be seamlessly composed. Balance changes and the aftermath feelings of a loss are normal within large market fluctuations. However, when the two are cohesive, you will feel more comfortable knowing your portfolio is built to comply with the risk you are willing to take. 

Selling Low = Locking in Losses

Remember the “buy low, sell high” phrase? Well, it’s more than just a phrase - it’s an investment strategy. The owner of our firm, Ben VerWys, said in the midst of the tumbling market and virus pandemic, “your 401k is like your face: don’t touch it!”. Emotions (and germs) were everywhere not too long ago and if you dwelled on your emotions, you may have considered selling investments. Going back to what Ben proclaimed, touching your accounts during a low market period might not be the best idea. Why? It locks in your losses. Think about it: if you get out of the market at an all-time low, not only are you opposing the “buy low, sell high” strategy but you also have no chance to ride the up wave. You lock in your losses when you get out of the market, not giving your investments any chance of recovery. 

I know emotions of fear and stress are always in full swing during impactful market fluctuations. However, if your portfolio resonates your risk tolerance and you understand selling investments at a low point leaves no opportunity for restoration, I believe reigning in those emotions becomes a much smoother process. 

Long-Term Mindsets Are Essential

Have you ever tried one of those games where you get a small zoomed-in part of a picture and have to try and guess what the whole picture actually is? That’s what having a short-term mindset feels like. When we look at one small time frame of the stock market, our judgement may jump to conclusions. When we jump to conclusions in the picture game, we just get our answer wrong. When we jump to conclusions in the market, we may lock in our losses and be on the sidelines - watching the market roar back to life without us. The market goes up and down whether we are ready or not. If you can mentally remind yourself you are in the market for the long haul, not a small sliver or time, you can accept the fluctuation of the market with ease. This is why having a long-term mindset is so crucial. 

If you aren’t close to retiring, zooming out of this dip in the market and remembering you have years and years to recover can save you a lot of stress. The previous lessons come into play here as well. If your risk tolerance aligns with your portfolio, the ups and downs of your account balance don’t lose you sleep. If you follow the “buy low, sell high” investment strategy, you will ride out the market downturn and not be tempted to sell out at a low point in the market. If you have a long-term mindset, contradicting the previous lessons won’t be a temptation. Just remember, sometimes you have to take a step back to see the beauty of the whole picture. 

The events of 2020 have not been the most welcoming, however, the lessons we can take away from them are here to stay. There is still a lot of uncertainty in the world. Will there be a second wave? Will the markets fall again? What else is 2020 going to throw our way? We may not have the answers but we know, as investors, how to push through. Here’s to 2020: the year that, so far, has taught us life long lessons.

Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

How to (Safely) Kick Your Cabin Fever to the Curb

Cabin fever is alive and well in many of us. Places are starting to slowly open back up, the weather is getting nicer, grills are in frequent use, and the itch to get away (even for the day) is intensifying. There are some important factors to consider when you start to plan your upcoming travels - more than just “should I pack a mask?” 

Budget First, Book Second

True story: my husband and I had two trips planned for 2020 and both were cancelled (not by choice) due to COVID-19. Cabin fever hit me hard. I started looking around for places to escape to. I found the cutest Airbnb and started the booking process. With my debit card in hand, reality hit me. Within a matter of 15 minutes, I was ready to book this vacation for my husband and I. This vacation would have cost us more than our original two trips’ expenses combined! Cabin fever and my emotions got the best of me - almost. I immediately put a halt to the booking process and came back down to earth. 

What I’m saying is you need to have a set budget BEFORE you start your travel planning. Being stuck inside for months has the power to make your common sense be a thing of the past. Sit down with your spouse, yourself, or your family and decide what is a realistic budget for your trip. Once this is accomplished, book away. Trust me, you don’t want to let your emotions get the best of you and be stressed from a trip you couldn’t afford in the first place. 

Flexibility is Key

I think we all would like to mute the words “corona virus/COVID-19/pandemic/etc.”. Everywhere we turn, it's in our face. The reality is, it’s still a concern and we still have to be informed. As places start to open up and new rules are in place, we need to make sure our plans can be flexible. Not only our plans, but our mindset needs to be open and flexible as well. As you go through your travel planning process, remember that the places you visit might change their guidelines, be at their full limited capacity, stop allowing out of state residents, and more. States are still trying to figure out how to navigate these unknown waters and we need to be open to that.

The best way we can be flexible is to have a backup plan or two. If you have your go-to restaurant every time you visit Traverse City, be willing to try a new place if they are at full capacity. Hey, who knows? You may even find your new go-to restaurant this way. 

Do Your Research

I’m not a scientist, I don’t work in healthcare, I have not experienced the corona virus first hand. The good news? Trusted resources have shared their wisdom with us. Research, people! See what the professionals have to say about flying versus driving. Should you stay in a hotel? What will be open and what activities are safe to do? All of these are important questions and thank goodness there are people out there who have a lot more knowledge in this area. 

If you are traveling out of state, make sure to research if they have different rules or guidelines. Visiting a famous monument? Research to see if they will actually be open. Staying in an Airbnb? Reach out to the host and see how they are personally taking precautions. 

I know research is not the exciting part of planning your next vacation, but this time around research is a high priority that must be done to have a stress-free trip. 

Don’t try to ignore your cabin fever because I can promise you, it will get worse. Be smart and don’t forget your common sense. Making a trip budget before checking out travel ideas will save you a lot of stress. When the time comes to get out of your town, be flexible with new guidelines and a potential change in plans. Just as importantly, research and make the best decisions for your family based on your findings. Your 2020 trip may look a little different than what you originally had planned, but carry on and keep in mind these factors as you plan your new trip. Your cabin fever will be behind you in no time.

3 Steps to Overcome Your Emotions During COVID-19

Welcome to the (almost) half-way point of 2020! Does that sound as weird to you reading it as it does to me typing it? Probably because if your year has looked anything like mine, that means a good chunk of it has been closed-off from the outside world. Let me tell you - the same view of my home office wall is getting boring. 

Not only has 2020 brought self-isolation but I’ve also had to let go of a lot of plans made. I’m going to guess you all have felt this one as much as I have. Vacations, weddings, graduations, birthdays, family get-togethers, and so much more are a few of the things we’ve had to hold off on - at least for now.  

There have been so many plans we have had to adjust in our personal lives. But is anyone talking about our financial plans? You may have gotten to this point in the year and realized you are behind in your financial plans. You may be experiencing frustration, disappointment, or even failure. Guess what? These are all normal feelings. When we set a goal, we celebrate when we achieve it. The journey leading up to the achievement is led by determination and hard-work. Well, the world has thrown a curve ball at our financial plans leaving many of us struggling to maintain our dedicated pace. It’s not that we have lack of determination or lack of hard-work. It simply comes down to the fact that something out of our control may be adding weight to our journey. Again, let me tell you that your current feelings are normal. Now, let’s discuss how we can navigate those feelings and get ahead of them. 

1. Accept That Plans Change

Whether you like this step or not, it is crucial. Just like plans change in our personal lives, our financial plans can change too. It doesn’t mean we did something wrong or right. Life changes and therefore, we should allow our financial plans to change with it. Let them be cohesive. Once you accept this, you can move on to the next steps with a positive and forward mindset. 

2. Allow Your Emergency Fund to “Do Its Thing”

I have found myself saying a lot that COVID-19 is something we will be telling our kids, grand kids, and great-grand kids about. The craziest of times are happening right now. If you are in need, you may feel hesitant to touch your emergency fund but let me bluntly remind you: those funds are exactly designed for uncertain times! Don’t be afraid to allow your emergency fund to do its thing. 

3. Revise Your 2020 Financial Plan

If you haven’t accomplished step 1, you may be turning and running right about now. If that’s you, run back to step 1 and then revisit this step. Maybe you are in a boat with many others where your income has been less than normal. Or maybe, you are in the opposite boat: you have received more than expected income and are getting closer to your goals. Either way, I want you to be reasonable with yourself and make adjustments to your goals and timelines where necessary. If you can realistically only accomplish a few goals out of your original list, prioritize and give yourself grace. If you have been able to crush more achievements than planned, stop and congratulate yourself! Whatever boat you are in, adjust accordingly and keep your head up. 

Obviously, I know this situation is what we least expected. Emotions may be feeling more intense and the continuing unknown doesn’t help. Focus on what you can control and keep moving forward. Remember: this is temporary. Use this time as an advantage to refocus your mindset to accept plans change, trust in your emergency fund, and keep powering away at your goals - even if you have to revise them. I want you to be able to look back at the year 2020 and say you hit a home run off of the world’s curve ball. I’ll be here, cheering you on all the way. 

Catch Action Point Founder Ben VerWys front page on CNN right now!

If you navigate to CNN.com right now, you will see a lot of articles about the Corona virus, one compelling article (to circle back to) about 20 foot waves coming to the great lakes, and one more article front and center titled ‘How to Recession Proof Your Investments.’

CNN recently reached out to Ben VerWys, Action Point’s Founder and Senior Financial Advisor to help put together this article about what investors can do to prepare for economic downturns.

Click the CNN screen below or navigate to this link for the full article: https://www.cnn.com/2020/02/26/success/recession-proof-investments/index.html

Action Point Financial Planning Founder and Senior Financial Advisor, Ben VerWys has won WealthManagement.com's Thrive Award as one of the 'Fastest Growing Financial Advisors' in the entire U.S.

For Immediate Release

December 4, 2019 - Action Point Financial Planning, an independent financial planning firm based in Grand Rapids, Michigan, has been named a recipient of WealthManagement.com’s inaugural Thrive Awards, the first-annual list of the nation’s fastest-growing Advisors.

“I am thrilled to learn that we have received this award! Five years ago, all I had was an idea - the role of a true Financial Advisor could be significantly improved compared to what I saw happening out in the marketplace.” said Ben VerWys, Founder and CEO at Action Point Financial. “At the time, there wasn’t nearly the emphasis on Fiduciary advisement that continues to grow so rapidly today. Much of our success is directly related to the fact that at Action Point, we do the work the right way. What I mean by the ‘right way’ is a laser focus on stewarding our client’s investments and managing their financial planning from a strictly Fiduciary standpoint. Our ‘math wins’ philosophy means we have no products to sell, a strong vested interest in seeing our clients lives improved, and an active effort to mitigate all conflicts along the way. These things are clearly laid out in our Fiduciary Oath that we make to all clients. It has been exciting to be part of the rapid evolution of financial advice over the last 5 years, but to receive an award specifically for our participation in that growth means we’re making the impact we set out to deliver.”

A total of 121 individuals and teams made the list this year, which was compiled by measuring percentage revenue growth over the previous three years. The average revenue growth of the 2019 Thrive Advisors was three times the industry average, as calculated by McKinsey & Company’s PriceMetrix.

To qualify for the WealthManagement.com 2019 Thrive Awards list, applicants had to be based in the U.S., offer financial services to individual clients, and have a minimum revenue of $100,000. Applications were accepted from individuals, teams and companies of all types and sizes—including solo advisors, ensembles, practices, family offices, RIAs and IBD reps.

The complete 2019 Thrive Awards list is available here, and will be featured in the December 2019 issue of Wealth Management magazine.

About Fiduciary Financial

Founded in 2014, Fiduciary Financial Advisors believes that client’s best interests come first. Period. They offer a variety of financial planning, retirement planning, investment management, cash management and business sale solutions to clients of all sizes throughout 22 different states. Each Advisor and employee at Fiduciary Financial is required to operate as a Fiduciary on all financial planning and investment recommendations, meaning not one member of the firm maintains any securities brokerage licences that can so often create conflict. Additionally, the firm is 100% Advisor owned and has no outside investment, meaning there are no decisions that pit client interests against shareholder interests. With no investors, it becomes much easier to always put clients’ first.’

About WealthManagement.com:

WealthManagement.com, an Informa business, provides everything wealth professionals need to know to stay knowledgeable about the industry, build stronger relationships, improve their practice, and grow their business—all from one site.

The Best TV We've Ever Seen

We're used to seeing financial related television delivered in a way that frankly, doesn't appeal to most viewers.  Terms like 'rate of return' or 'beta' or 'compounding' just don't excite.  That is, unless a hilarious comedian delivers them.  John Oliver (comedian, former Daily Show correspondent, and host of Last Night Weekly ) did something important.  He recorded some of the best television we've ever seen.

This must-watch, plain English (pun intended) explanation about the rigged state of the financial service industry hilariously outlines why you should care more about your money.  You.  The one reading this right now.  It's a little long but well worth the time to watch. (fair warning - this video contains crude language and concepts that are meant to be humorous but may be in appropriate or undesirable for some. )

Fiduciary Financial is a Fiduciary only firm that believes in low cost and conflict free investing.  I.e. We are exactly the type of Advisor that John Oliver is advocating that you use. If you would like to talk about your situation, contact us!  

P.S. If you are a retirement plan sponsor for your company or can affect positive change for your company's retirement plan, it is particularly important that you watch starting at 11:46 minute mark.  We would love to help your company eliminate excess costs from your retirement plan and make it a better experience for all of your employees. It's very simple, submit a brief request here: CONTACT US

JUST ANNOUNCED! Action Point Financial is a finalist for Veteran-Owned business of the year in West Michigan!

We're proud to announce that Action Point was recently nominated and is now a finalist for Veteran-Owned business of the year in West Michigan by the Grand Rapids Chamber of Commerce. 

The United States military is not the environment one joins to craft and develop the foundation of successful entrepreneurship. And yet, when I reflect on the growth Action Point has experienced over the last 3 years, it is evident that the principles and disciplines the military instills are very much a part of the firm being built today.

The core values of the United States Navy are Honor, Courage, and Commitment.

I don't know any successful business that has been built without a healthy dose of commitment and we remain as committed as ever to doing our part in making investors lives better. That continues to mean advocating for and delivering lower investing fees,  fiduciary management, and full blown financial planning for today's and tomorrow's investors.

Honor is something lacking throughout the financial services industry. I'm not saying there aren't good people but there are a lot of bad and even more troubling to us, lots of good people that have to follow honor lacking policies, procedures and practices. Honor is something we take seriously. We have to earn it each and every day and work hard at that.

Courage. That's an interesting one. Being a great investor takes courage. We haven't forgotten what it's like to be in the midst of a crash and believe courage is just as important in today's investing world as ever before (maybe more so).

We're proud to be a finalist for this award, whether we win it or not. What it represents is meaningful to us.

Ben VerWys - Co-Founder & Senior Financial Advisor / former U.S. Navy Military Police Officer

What is a Best Interest Contract Exemption and why would your financial advisor want you to sign one?

Bottom line:  A best interest contract exemption allows financial advisors that still make their money by selling products for commissions to be compliant with the new DOL fiduciary rule when working with your retirement accounts.  These retirement accounts were expanded to include individual retirement accounts (IRAs) but do not apply to other accounts like your brokerage account or college saving 529 accounts.  Many of the fiduciary requirements are still in place even if you sign the BIC, but you have to ask yourself if exempting your best interest is really what's best for you. 

In the past couple of days, you may have received an unexpected call from your financial advisor.  The conversation went pretty well, as usual.  He is always so nice and probably asked how your summer was going, or how that promotion at work was shaping up.  At some point, he undoubtedly worked in a comment on the Department of Labor’s (“DOL”) Fiduciary Rule, how D.C. is just adding more requirements for us all.  Unfortunately, that means you need to sign yet another form for the lawyers that he called the BIC.  Sounds harmless enough, but hopefully when you see that document come through your inbox, you get a little curious.

Sure it looks nice, but it’s still lipstick on a pig.  This time it’s your piggy-bank they are trying to cover up!

SOME RULES ARE WORTH HAVING (FOR YOU, NOT THEM)

Welcome to the third installment in our series on how the recent Department of Labor's “Fiduciary Rule” may be impacting our financial system and you the investor.  As a Registered Investment Advisor (RIA), we at Action Point Financial always have been and always will be fiduciaries, but this new rule is causing some substantial changes for broker-dealer firms. 

To quickly recap our previous discussions on the "fiduciary rule," we first talked about what a fiduciary investment advisor is and how to know if you’ve got one (spoiler: you probably don’t) The Day Has Finally Arrived! Fiduciary Rule is Here: An Open Letter to Consumers.  Later we discussed how costly (and how transparent) these advisory services should be (Arbiter of Reasonableness: What is Reasonable & Who Gets to Decide?.  If you haven’t read those, they’re both quick reads and worth your time to understand the rest of this article.  Go ahead and read them, now’s a good time.

If you are still working with a financial advisor at a broker-dealer firm, a word of caution to you, especially if they approach you with that little form called a BIC or Best Interest Contract Exemption (BICE).  While these individuals may call themselves "financial advisors" they are probably better represented by their former title, stock broker, meaning they earn money by selling you products that pay them with commissions, 12b-1 fees, fund loads, or profit sharing with proprietary products. 

A fiduciary financial advisor has the legal obligation of putting their clients’ needs first and taking the highest level of care when choosing investments.  This has not been the case with financial advisors working at broker-dealers.  For them to sell a product to you, they previously only needed to meet "suitability" standards based on age and financial situation, with no regard to fees or diversification.  Additionally, they are only able to provide general financial education to those seeking their services and not permitted to provide detailed advice to their clients, even though they call themselves financial advisors. 

WHAT IS THE BIC

Enter the Best Interest Contract Exemption (BICE) or even BIC for those trying to hide that signing it actually waives your rights.  The majority of Financial Advisors are still brokers or may be dually registered, but the new DOL "fiduciary rule" requires anyone working with a retirement account to be a fiduciary.   These accounts include your 401k or 403b, any of your IRAs, or other ERISA accounts that you might have. 

Getting paid a commission does not fit well in the fiduciary world since it always adds another conflict of interest for the advisor.   Once signed, the BICE allows the advisor to be able to continue to earn that nice commission when selling you funds for your retirement accounts.  In whose best interest is that?

WHAT IS NOT COVERED

The BICE still requires those advisors that charge commissions to maintain many of the fiduciary standards such as acting in the client’s best interest by being prudent and loyal while properly disclosing the fees they charge in a transparent manner.  However, these requirements only apply to your retirement accounts, and only when you have given them the ability to act with discretion.   This means if you call your broker asking for a specific product, they can sell you it, even if it should not be in your portfolio.  If you were to call your advisor requesting a particular product, or if this was for your brokerage (non-tax deferred accounts) they do not need to follow these rules.

WHY WOULD YOU SIGN IT?

The BIC drastically increases the liability for many broker-dealers to work with your retirement accounts, and many firms are choosing to send their smaller accounts packing.  Some are making the statement that this is hurting those clients because they are not getting financial advice, but was that kind of advice really worth getting?  Others are setting up automated, “robo-advisors” to automatically feed your through their computer system and still collect their check at the end of the day.    

Maybe we are a bit biased, but we believe that if you call yourself an advisor then you should be expected to provide open and trustworthy advice.  A cook should eat their own cooking, and we should be treating our client's money like it was our own.  We should make money when our client's make money, not by charging expensive commissions up front and then forgetting about them.  We believe in giving prudent advice and thankfully for us, have found that many consumers wanted this all along.

So, what should you do when looking at a BICE from your current financial advisor?  That answer is ultimately up to you, but if you're unsure and want a second opinion, we would love to gain an understanding of your needs and guide you in the right direction.

Arbiter of Reasonableness: What is Reasonable & Who Gets to Decide?

In our last post, we talked about the Department of Labor's newly launched Fiduciary Rule and what it means for you. We also raised another issue that isn’t getting much coverage: in a world where everyone is forced to charge on a fee-only based system, and those fees are required to be “reasonable,” who decides what is reasonable? 

It turns out, a fiduciary can act in your best interests, but still charge too much. Sometimes, WAY too much! In addition, we’re concerned that what financial services companies consider “reasonable” fees may start to increase as broker-dealers now following the fiduciary standard seek to recoup lost commissions revenue. Reasonable fees are generally deemed to be around the industry average of 1.00-1.25% of assets under management (“AUM”), depending on total investment amounts. (See the figure below for an illustration of this.)

Source: Advisory HQ 2017 Report on Advisory Fees and Costs

The problem with this assumption is two-fold.

First, this range is antiquated and has not adjusted for the current environment. As returns on money markets, bonds, and other fixed income based assets have come down over the years, Advisory fees have actually gone up according to leading research firm PriceMetrix.

The second problem is that “reasonableness” has historically been defined by, and interchangeable with industry-average. In other words, the financial services industry itself has been the arbiter of reasonableness. That’s right, the industry that is incentivized to make as much profit as possible is the same group that gets to determine what is reasonable. So while the fiduciary rule is a nice step in the right direction, it doesn’t go nearly far enough. Investors not paying attention are still likely to lose large amounts of money, just now in the form of annual fees instead of commissions.

Keep in mind this does not even include the expenses associated with investment funds in your accounts, or any transactional costs. If you think that’s too much – and you should – what are your options?

We believe that in the future, clients’ expectations should drive down the industry average AUM fee, and rightly so. There’s no surprise that what we advise you to seek is what we offer: transparent, low cost, fiduciary investment advice. First, look for a fee-only advisor that acts as a fiduciary at all times, with all of your money. Remember that the new rule only addresses retirement accounts right now. So when it comes to any non-retirement money, including college savings, inheritance, etc. most Advisors do not need to act in a Fiduciary capacity still. Second, look for an advisor that is dedicated to transparency, who will candidly discuss with you how she gets paid and how that impacts your investments. The more forthcoming an advisor is with you on these matters, the more likely she is to be truly operating in your best interests.

Finally, look for an Advisor with a lower cost structure. Many firms have no flexibility when it comes to their AUM rates – these may tend to be part of big banks or franchised by a larger corporate entity – but some firms do. Ask to see the Advisor’s fee schedule and ask whether there’s any flexibility in those rates. Our clients prior to arriving at Action Point almost always paid at least 1% with many between 1.20% - 1.30%. At Action Point, every client pays less than 1% for investment management. We pro-actively seek to set each client’s fee as low as possible. When compared to the “reasonable industry averages” we can typically offer fee reductions of up to 20-40%!

Of course, lower cost cannot be the *only* thing you consider. Investors can and should be looking at both reasonable cost and value in exchange for cost.

At Action Point, we believe the future is now. We are dedicated to a transparent, low cost fee structure that’s always well below industry average, regardless of your investment balance. We charge less because we can, and because it’s the right thing to do. We are all fiduciaries, all the time, which means we’re always working in your best interests and with no commissions on investments, ever. We want to help you enjoy your life and save responsibly for the future.  Contact us today to find out how.

The Day Has Finally Arrived! Fiduciary Rule is Here: An Open Letter to Consumers

The first phase of the Department of Labor’s “Fiduciary Rule” goes into effect today. This topic has been in the news a lot lately, so you probably have some idea that your financial advisor should be a fiduciary. The author of this Forbes article thinks that regardless of the rule’s legal future, consumers will hold their financial advisors to it, and I agree. You have been enlightened, and now I hope you will accept nothing less than your best interests as top priority. You already demand this level of care from your doctor and accountant so when your life savings are at stake, you should absolutely expect the same standard of care and ethical duty.

But what does it mean exactly, to be a fiduciary? And what does it mean for you if yours isn’t?

Essentially, a fiduciary is an financial advisor who is required by law to act in the best interests of the client. But there’s more to being a fiduciary than meets the eye. It’s not just a label you can slap on.  Only one kind of financial advisor – one who acts exclusively as a Registered Investment Advisor or “RIA” – is required to act as a fiduciary at all times. That little three letter word “all” is really important.

It is possible, and increasingly popular, for financial advisors to be dually registered, meaning sometimes they wear a fiduciary hat to provide investment advice while at other times not; getting commissions through an affiliated broker-dealer on other investments. So the question to be asking is not, “Are you a fiduciary?” but rather “Are you required to act as a fiduciary at all times?” 

These dually registered advisors are blurring the distinction between broker and advisor, which can be confusing to investors. Other key differences between these two approaches include the following:

The fiduciary standard goes beyond the traditional requirement that broker-dealers “reasonably believe” the recommended investments to be “suitable” for the client, based upon their needs, objectives and circumstances. The broker’s duty also remains to the broker-dealer by whom she is employed, not necessarily to the client. To make matters worse, many of these broker-dealers are publicly traded companies which means their duty remains to the shareholders. The fiduciary standard requires RIAs to maintain a “duty of loyalty and care” to their clients, which means the advisor is required to be on your side, regardless of whether it makes her, or her employer, more money.

The essential difference between the suitability and fiduciary models is their primary focus: a product vs. client orientation. The licensing requirements for these two professions back this up. A broker is trained and licensed primarily to be a salesperson and has a Series 7 license to sell a product. An RIA, however, maintains a Series 65 license to provide investment advice. 

I can hear you protesting as I type these words - “But my Financial Advisor is a great guy!” or “We’ve been with XYZ Brokerage forever… of course they’re looking out for us!” I am not saying your Financial Advisor isn’t a great guy, or that you haven’t had good service from your brokerage. But the bottom line is that under the fiduciary standard, an advisor working with an RIA would be prohibited from putting your money in an investment from which she would receive a higher fee because it would cost *you* more money. The great guy at your brokerage would not, as long as that was one of many investments deemed suitable for your situation. In fact, a broker might even be incentivized to invest you in his brokerage’s products because he earns a higher commission on them, regardless of whether they are the best choice for you.

Another byproduct of the sales or transactional orientation of most brokers is that once the sale is completed and they’ve received their commission, you may not hear much from them. We often hear people say they “feel like a number” or don’t hear from their financial advisor regularly which makes sense when you think about it - if they’ve already received their compensation and are not bound by a fiduciary duty to keep working in your best interests, why would they call more than they need to? Unless you’re an investor with a lot of assets, it is not cost effective for them to spend time on you. This is often true for many RIAs, as well, because they tend to be paid a fixed percentage of the invested amount. This is why many investment management firms have minimum account sizes that exclude less profitable clients.

Which brings us to another problem in the scope of advisor compensation: in a compensation structure where everyone is moving to fee-only, and those fees are required to be “reasonable,” who is the arbiter of reasonableness? If everyone is charging around the industry average of 1.00% - 1.25% of assets under management – and we may see that increase as advisors seek to make up for lost commissions – investors don’t have many better options. So even fiduciary RIAs and dually registered brokers can legally meet the definition of fiduciary, but still charge what we believe are excessive investment management fees. And in the end, you, the client still pay a steep price.

At Action Point, we do things differently. We are all fiduciaries, all the time. That means we serve your best interests above our own. That means a transparent, and much lower than industry average fee structure with no commissions on investments, ever. We believe that talk is cheap. So this is our way of adding real value (plus we can sleep at night which is an added bonus.)

We don’t believe in minimums either. We currently help investors that range in size from just getting started to tens of millions. If you’ve got a little to invest, we want to steer you in the right direction. If you’ve got a lot, we want to help you avoid expensive mistakes. We want to help you enjoy your life and save responsibly for the future.                                                                                                                 

INC. Magazine spotlights Action Point Financial

Action Point recently collaborated with INC. Magazine to co-write the nationally read article - Entrepreneurs Need to Get Serious About Their Investment (Advisor). Enjoy! (time to read: < 3 minutes)